BSkyB stake in ITV causes concern

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LONDON -- U.K. media regulator Ofcom and antitrust regulator the Office of Fair Trading have told the government that British Sky Broadcasting's 17.9% stake in commercial broadcaster ITV raises significant competition concerns and need further investigation.

The move sent shares in ITV up 1.5% at £1.18 ($2.36) on the sentiment that Sky might eventually be forced to offload its stake.

BSkyB CEO James Murdoch paid slightly less than £1 billion ($2 billion), or £1.35 ($2.70) per share, for the stake in November, derailing a possible tie-up between ITV and cable group Virgin Media.

As part of a report to trade secretary Alastair Darling about the potential impact of the deal, Ofcom said the deal raises public interest issues relating to the provision of news.

"Ofcom's advice is that there are public interest issues, in relation to sufficient plurality of news provision for both cross-media and television news in the U.K.," the regulator said.

In a separate report to the secretary of state, the Office of Fair Trading said that ITV was no longer independent under the deal.

"We have concluded that this partial ownership link between two key players raises significant competition concerns," CEO John Fingleton said. "Sky's shareholding means that ITV is no longer fully independent, and this may alter the future competitive landscape, especially as we approach digital switchover. Given the high stakes for tens of millions of U.K. consumers, we believe these risks to competition merit further examination."

Darling will now review the individual reports before deciding whether to refer the deal to the Competition Commission, the U.K.'s most senior antitrust body, for a further inquiry into the deal.